Unilife May Finish The Year With >100% YTD Gains

Unilife Corp (NASDAQ: UNIS), a company with a decently large pipeline of customizable injection devices, saw another big rally this year after the company announced - on November 20th 2013 (link) - that the it signed a long-term supply agreement with the London-based generic pharmaceutical company Hikma Pharmaceuticals (OTCPK:HKMPY). This is the latest in a string of successes for the company in 2013, which have cumulatively added roughly 80% to the valuation of the company since the start of the year.

The 15-year supply contract with Hikma Pharma obligates Unilife to provide two Unifill® pipeline products - the Unifill syringe and the Unifill Nexus™. These will be used to improve the delivery of 20 different generic products sold by Hikma.

Unifill

Unifill is the brand name given to a line of prefilled syringes with automatic needle retraction. They deliver the exact dose needed in a customizable timeframe, and they reduce the chance of injury and/or splatter of blood/tissue residue. This should be especially useful for patients outside of the hospital setting, who may require the delivery of an injectable drug. Since most do not know how to use a syringe, and since many cannot afford home services, the Unifill device fills an unfit need while reducing chance for injury.

Unifill Nexus

The Nexus is another syringe, although it serves a more specific purpose. It is designed as a better glass syringe attachment to luer access devices (NLADs). Patients who are receiving some type of IV drip are usually set up with a luer access device, which essentially acts as a syringe with a significantly reduced chance for infection. The end of the Nexus device basically attaches to a luer access device where an IV drip would be attached.

Financial Implications

The closing of the contract with Hikma also improves Unilife's financial situation significantly. Unilife's cash pile had shrunk to $7.4 M by the end of Q3 2013, but the $5 M in immediate milestone payments that Unilife will receive will alleviate their cash burn problem until 2014. Another $15 M is expected during 2014, and another $20 is expected in 2015. Unilife should be able to swing into profitability by this time, which should allow the stock to appreciate further in value.

But even more important is the confirmation of Unilife's Unifill platform. Going forward, Unilife should have a much better chance at closing deals with larger generic pharmaceutical companies. This is where the most significant growth potential for Unilife lies.

Because of this current buildup, we believe that the company has some more room to run in the next month. We also expect the stock to break the psychological $5/share barrier with another round of good news. The company

Source: Unilife May Finish The Year With >100% YTD Gains

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. (More...)

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